EXEMPTION U/S 54 TO SELF & HOUSING LOAN BENEFIT TO SON

EXEMPTION U/S 54 TO SELF & HOUSING LOAN BENEFIT TO SON

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U/S 54

Query 1]

Kindly guide me in the following matter:

  1. I am having house in my name under NIT lease. Recently, lease is renewed and expenditure of Rs. 15,000/- is incurred for stamp paper and registration.

  2. I have purchased one plot in my name and expenditure of Rs. 22,000/- is incurred for stamp paper and registration fees.

Kindly guide whether exemption under 80C is available for above expenditures.  [Deepak Pande-d_pande1@yahoo.in]

Opinion:

  1. Stamp duty & registration expense on renewal of NIT Lease would not be eligible for deduction u/s 80C.
  2. Stamp duty & Registration expense for purchase of a residential house property is only eligible for deduction u/s 80C. Expenditure for purchase of plot would not be eligible for deduction u/s 80C.

 

Query 2]

My father had purchased a house for Rs. 7,000/- in 1978.  He expired in 2009. Now, the said house was transferred in joint name of me and my mother.  On 26.12.2011, we sold the said house for Rs. 35,00,000/-.  Due to some problem, we got the purchase money late.  By that time, we were not able to pay the advance tax nor could deposit it in the capital gain bond.  As a result, we are left with the only option of purchasing another house till 26.12.2013. Now, the rates are very high of property & we are not in a position to purchase a new house. My question is can we pay the tax now and what will be tax liability with penalty, if any? We both have a PAN number and can we file the return separately. You are requested to kindly guide accordingly. [kundanchouhan@yahoo.com]

Opinion:

It appears that none of you have so far filed the return of income for the FY 2011-12. You can pay the tax on Long Term Capital Gain (LTCG) arisen from sale of inherited house property now also. You would be required to pay the interest for delay in the payment of tax & no other penalty is leviable in such case if the return for the relevant year is filed on or before 31.03.2013. Both of you have to pay tax individually & have to file the return of income separately.

 

Query 3]
I have sold my first house property in Feb -2013 for Rs. 15 Lacs. I had availed housing loan earlier at the time of purchasing the property and same is repaid and nothing is outstanding as of now. I have availed Income Tax benefit on repayments of housing loan. Now, I have to buy new property at Nagpur in the name of my son for Rs. 24 Lacs. The amount of Rs. 15 Lacs is to be paid to Owner ( sale of first property by me) and balance amount will be arranged from Housing  Loan in the name of my son because I will be retiring my services in 30.04.2013  and new property will be used by me. My query is, whether on sale of first property of Rs. 15 Lacs, the Tax will be applicable or not as the same is utilized for purchase of new property?
[ld.dharmadhikari@adityabirla.com]

Opinion:

An exemption u/s 54 can be claimed on the amount of Long Term Capital Gain (LTCG) arising from the sale of the house property. For exemption, taxpayer has to invest the amount of LTCG for purchase or construction of another residential house property within a prescribed period. In your specific case, you have earned the amount of LTCG on sale of house property whereas the house property is sought be purchased in the name of your son so as to enable him to claim the income tax benefit on the housing loan to be availed for the balance amount (Rs. 9 Lacs).
To be precise, you want
a] to claim exemption towards the entire amount of LTCG arising from the transfer of your first house property and
b] to have the benefit on housing loan to your son as he will be having taxable income after your retirement and he will be repaying the amount of housing loan from his income.

For claiming an exemption u/s 54 in your hands AND future benefit of interest & principal repayment by your son, the new house property should be purchased in the joint ownership. The new house property should clearly incorporate the ownership ratio of the joint owners. Your share in the new house property should be more than the amount of LTCG and the share of your son should exceeds the amount of Housing loan sought to be availed by him and the housing loan should be recorded as his contribution in the house property.

Query 4]
While making a donation to a public trust, they advised me that Donation given to them is exempt under the income tax laws. However, in the certificate issued to them by the Income Tax Department, it is quoted that the exemption is available up to 31/1/2010. On making an enquiry with the trust, they told me that this exemption limit has been automatically renewed by the IT Department. Kindly clarify and oblige. Further, also please clarify how much donation is exempt out of the total exemption limit and can we preclude the donation amount from the total taxable limit or should we first pay the tax and then claim the refund in the next year? [K.s.popat- kaushikpopat@gmail.com]

Opinion:

  1. It’s true that the validity of all the trust & institutions approved for the purpose of section 80G has been automatically extended w.e.f. 01.10.2009 till it is not cancelled.
  2. Under Section 80G, the deduction admissible is @ 100% or 50% of the donation amount depending upon the fund/ institutions to whom the donation is done. The total deduction u/s 80G is restricted to a maximum of 10% of the adjusted gross total income. If the receipt of Donation reveals the fact of approval of the said trust U/s 80G(5)(vi), then you can claim deduction. Recently, by the Finance Act-2012, Section 80G has been amended so as to provide that payment exceeding Rs. 10,000/- will be allowed as deduction u/s 80G only if such is paid by any mode other than cash.
  3. The taxable income and the tax liability would be required to be computed keeping in mind the deduction admissible u/s 80G. There is no question of first paying the tax and subsequently claiming the amount of refund towards the tax already paid.

U/S 54


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